Economics 970: Economics of drug use and drug policy
Tuesday/Thursday 4:00-5:30 Memorial Hall 303
Math level: 2
Beau Kilmer ()
Course description
Should marijuana use be legal? Are heavy drug users sensitive to drug prices? What would happen if we increased funding for anti-drug enforcement? While there is tremendous debate about the answers to these questions, there is relatively little empirical analysis to guide these discussions. By providing an introduction to the economic analysis of drug use and drug policy, this course should help those who want to participate in these debates and/or push the research frontier. The class should also interest students who want to learn how to study black markets and/or other vices. At the end of this course, students will:
- Be familiar with the seminal works and the cutting-edge research related to the empirical analysis of drug use and drug policy.
- Understand the relevant economic concepts and theories as well their limitations.
- Write an empirical paper about drug use and/or drug policy based on the theories and data discussed in class and in the assigned readings.
The first half of the course will focus on the background literature and economic concepts crucial for contributing to discussions about drug use and drug policy. The second half will mostly focus on empirical studies of U.S. drug policies, but there will be a healthy amount of discussion about drug policy in other countries, too.
Course requirements and grading
Participation (30%)
Regular class participation is an essential part—actually, it’s the goal—of this class.
Papers (65%)
- Paper about the economic cost of drug abuse, 5 pages (10%), due in class 2/24.
- Paper about Becker’s theory of rational addiction, 5 pages (10%), due in class 3/15.
- Empirical exercise about marijuana markets, 5 pages (10%), due in class 3/24. You will construct an econometric model, report your findings, and analyze the results.
- Final paper proposal, 5 pages (5%), due 4/11 (email to me by 5:00 pm).
- Final paper, 20 pages (30%), due 5/11 (email to me by 5:00 pm). This will be an empirical analysis of a drug-related topic that interests you.
Late papers will only be accepted in the most extreme circumstances (e.g., hospitalization, family emergency).
Presentation (5%)
On April 28th, everyone will give a five minute PowerPoint presentation about their final paper and get comments from the other students. Details about the presentation requirements will be handed out in class.
Course readings
We will use readings from several sources to guide our class discussions. The main texts for the class are Rob MacCoun and Peter Reuter’s Drug war heresies: Learning from other vices, times, & places (Cambridge University Press, 2001) and Charles Manski et al.’s Informing America’s policy on illegal drugs: What we don’t know about illegal drugs keeps hurting us (National Academies Press, 2001). The Harvard library system has multiple copies of these (I put some on reserve) and you can also download Manski by chapter (for a fee) at Other readings are either available on-line (for free) at the course website or are in a course packet that can be purchased.
There will be roughly 70 pages of readings each week and I expect students to read them before class. Honestly, if you don’t do the readings, it will be difficult for you to make thoughtful contributions to the seminar. In addition to stimulating our discussions and highlighting useful data sources, the readings will expose students to an array of methodological techniques, including multivariate regression, cost-effectiveness analysis, cost-of-illness studies, Monte Carlo simulation, and randomized controlled trials.
I.INTRO TO DRUG USE AND DRUG POLICY
10-FebBeginning to think about drug use as an economist
Becker, G. (1993). Nobel lecture: The economic way of looking at behavior.
Note: Don’t worry about the Appendix
Fact sheets from the Office of National Drug Control Policy:
Note: Just read “Background” and “Effects” sections
Kleiman, M. (1992). Drug abuse and other bad habits. Against excess: Drug policy for results.
New York: Basic Books.
15-FebDrug use and drug policy in America: An introduction
Musto, David. (1991). Opium, cocaine and marijuana in American history.
Scientific American, 265, 40-47.
Drug war heresies, Chapter 2.
17-FebAnalyzing drug policy
Drug war heresies, Chapter 13
22-FebRegression refresher/STATA
24-FebCalculating the economic costs of drug use
Paper #1 due
Harwood, H., Fountain, D., and G. Livermore. (1998). The Economic Costs of Alcohol and Drug
Abuse in the United States, 1992. Bethesda, MD: National Institutes on Drug Abuse.
Note: Only read Chapters 1-3 and those related to your paper assignment
Kleiman, M. (1999). “Economic Cost” Measurements, Damage Minimization and Drug
Control Policy. Addiction, 94(5), 638-641.
Kopp, P. (1999). Economic Costs Calculations and Drug Policy Evaluation. Addiction, 94(5),
641-644.
Reuter, P. (1999). Are calculations of the economic cost of drug abuse either possible or useful?
Addiction, 94(5), 635-638.
II.ECONOMICS OF SUPPLY
1-MarWhere do drugs come from?
Drug Enforcement Administration (2002). Drugtrafficking in the United States.
“Afghan Poppy Growing Reaches Record Level, U.N. Says”, New York Times, 11/19/04
Kopp, P. (2004). Drug supply and criminal organizations. Political economy of illegal drugs
(London: Routledge).
3-MarRisks and prices
Reuter, P. and M. Kleiman (1986) "Risks and Prices: An Economic Analysis of
Drug Enforcement," in Tonry and Morris, (eds.) Crime and Justice: An Annual Review,
Vol. 9, pp. 128-179.
8-MarDrug dealing in America: Gangs, jugglers, and loners
Note: This class will be held at the BokCenter
Levitt, S. & Sudhir Venkatesh. An Economic Analysis of a Drug-Selling Gang's Finances.
Quarterly Journal of Economics 115 (August 2000): 755-789.
Caulkins, J., B. Johnson, A. Taylor, & L. Taylor. 1999. What Drug Dealers Tell Us About Their
Costs of Doing Business. Journal of Drug Issues, 29, 323-340.
IV.ECONOMICS OF DEMAND
10-MarWho uses drugs and how much do they use?
Department of Health and Human Services (2004). Overview of findings from the 2003
National Survey on Drug Use and Health. Chapters 1, 2, 5, 7 only
Zhang, Zhiwei (2004). Drug and alcohol use and related matters among arrestees, 2003.
15-MarIs drug addiction a rational behavior?
Short essay #2 due
Kopp, P. (2004). Addictive consumption. Political economy of illegal drugs
(London: Routledge).
Revisit Kleiman, Chapter 2 from February 10.
17-MarAre (potential) drug users sensitive to drug prices?
Dave, D. (2004). Illicit drug use among arrestees and drug prices. NBER Working Paper 10648.
22-MarSubstitutes, complements, and gateways
Chaloupka, F., & Pacula, R. (2000). Economics and anti-health behavior: The economic analysis
of substance use and abuse (pp. 89-111). In W. Bickel & R. Vuchinich (eds). Reframing health behavior with behavioral economics (London: Lawrence Erlbaum)
Drug war heresies, pp. 345-351
Morral, A., McCaffrey, D. & Paddock, S. (2002). Reassessing the marijuana
gateway effect. Addiction, 97, 1493-1504.
24-MarSources of data for economic analysis of drugs and drug policy
Empirical exercise due.
National Research Council (2001). Data needs for monitoring drug problems. Informing
America’s policy on illegal drugs: What we don’t know about illegal drugs keeps hurting us (pp. 77-123). Washington, DC: NationalAcademy Press.
V.DRUG POLICY: CRIMINAL JUSTICE
5-AprDrug use and the criminal justice system
Chriqui, J.F., Pacula R.L., McBrideD.C., Reichmann, D.A., VanderWaal, C.J., and Y.
Terry-McElrath. 2002. Illicit Drug Policies: Selected Laws from the 50 States.
(Note: Please only read pages 1-25)
Bureau of Justice Statistics. Drug and Crime facts
National Research Council (2001). Sanctions against users of illegal drugs. Informing
America’s policy on illegal drugs: What we don’t know about illegal drugs keeps hurting us (pp. 187-207). Washington, DC: NationalAcademy Press.
7-AprWhy should drug laws matter?
Drug war heresies, pp. 76-94
Pacula, R., MacCoun, R., Reuter, P., Chirqui, J., Kilmer, B., Harris. K., Paoli, P., Schaefer, C.
(Forthcoming). What does it mean to decriminalize marijuana? A cross-national empirical examination.
11-AprFinal paper proposal due via email at 5:00 pm. Feel free to turn it in early and I will return it with comments ASAP.
12-AprDo possession laws and penalties reduce use?
Pacula et al. (Forthcoming) Marijuana decriminalization: What does it mean in the United
States?Journal of Policy Analysis and Management.
RANDDrugPolicyResearchCenter (1997). Are mandatory minimum drug sentences cost-
effective?
14-AprDo sales laws and penalties increase prices?
Bushway, S., Caulkins, J., & Reuter, P. (2003). Does state and local drug enforcement raise
cocaine prices?
VI.DRUG POLICY: PUBLIC HEALTH
19-AprDo drug prevention programs work?
National Research Council (2001). Preventing drug use. Informing America’s policy on illegal
drugs: What we don’t know about illegal drugs keeps hurting us (pp. 208-240). Washington, DC: NationalAcademy Press.
21-AprDoes drug treatment work?
National Research Council (2001). Treatment of drug users. Informing America’s policy on
illegal drugs: What we don’t know about illegal drugs keeps hurting us (pp. 241-270). Washington, DC: NationalAcademy Press
Reuter, P. (1997). Treatment works...well enough. Drug Policy Analysis Bulletin.
26-AprWhat is harm reduction and does it work?
Drug war heresies, pp. 265-299
Ribeaud, D. (2004). Long-term impacts of the Swiss heroin prescription trials on crime of treated
heroin users. Journal of Drug Issues, 34, 163-194.
VII.SPECIAL TOPICS (We could also focus on other issues)
28-AprilStudent “work in progress” presentations
3-MayAre other countries doing a “better” job with drug policy?
Drug war heresies, pp. 205-264
“Britain to Stop Arresting Most Private Users of Marijuana”, New York Times, 7/11/02
“Easing of Marijuana Laws Angers Many Britons”, New York Times, 8/12/02
5-MayWhat would happen if we changed U.S. drug policy?
Drug war heresies, pp. 328-370
11-MayFinal paper due at 5:00 p.m.